Euro stabilizes near 1.1750 as focus shifts to ECB, US data
After spending the first half of the day under bearish pressure on Wednesday, EUR/USD stage a late rebound to close marginally lower. The pair stays quiet near 1.1750 in the European morning on Thursday as investors stay on the sidelines ahead of the European Central Bank’s (ECB) monetary policy announcements and November inflation data from the US.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | 0.12% | 0.03% | 0.06% | 0.65% | 0.68% | -0.12% | |
| EUR | 0.00% | 0.13% | 0.02% | 0.06% | 0.69% | 0.69% | -0.10% | |
| GBP | -0.12% | -0.13% | 0.00% | -0.07% | 0.55% | 0.55% | -0.24% | |
| JPY | -0.03% | -0.02% | 0.00% | 0.04% | 0.64% | 0.64% | 0.08% | |
| CAD | -0.06% | -0.06% | 0.07% | -0.04% | 0.62% | 0.62% | -0.02% | |
| AUD | -0.65% | -0.69% | -0.55% | -0.64% | -0.62% | 0.00% | -0.79% | |
| NZD | -0.68% | -0.69% | -0.55% | -0.64% | -0.62% | -0.00% | -0.79% | |
| CHF | 0.12% | 0.10% | 0.24% | -0.08% | 0.02% | 0.79% | 0.79% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The ECB is widely anticipated to leave key rates unchanged after the last meeting of the year. Revised macroeconomic projections could influence the Euro’s valuation. In case there is a positive revision to Eurozone growth expectations, investors could see this as a sign of a neutral/hawkish policy outlook next year. In this scenario, EUR/USD could regather its bullish momentum. Conversely, a downward revision to inflation forecasts, combined with a weaker growth outlook, could weigh on the Euro with the immediate reaction.
Following the ECB event, investors will pay close attention to the US inflation data. On a yearly basis, the Consumer Price Index (CPI) and the core CPI are forecast to rise by 3.1% and 3%, respectively, in November. In case the headline CPI comes in above the market expectation, the USD could hold its ground and cause EUR/USD to stretch lower. On the other hand, a soft CPI print could revive expectations for another Federal Reserve (Fed) rate cut in January and trigger another leg lower in the USD, opening the door for a bullish EUR/USD action in the American session.
According to the CME FedWatch Tool, markets are currently pricing in about a 25% probability of a 25-basis-points Fed rate cut next month.
EUR/USD Technical Analysis:
The 20-period Simple Moving Average (SMA) has flattened around price, while the 50-, 100- and 200-period SMAs rise at 1.1705, 1.1662 and 1.1608, keeping a bullish alignment with spot above them. The Relative Strength Index (14) stands at 54, neutral and edging higher.
Immediate resistance aligns at 1.1765 (mid-point of the ascending regression channel), followed by 1.1800-1.1810 (round level, upper limit of the ascending channel).
The lower limit of the ascending channel and the 50-period SMA form a support area at 1.1700-1.1700, followed immediately by the rising trend line near 1.1680. A close below the latter could attract technical sellers and trigger another lef lower toward the 100-period SMA near 1.1660.
(The technical analysis of this story was written with the help of an AI tool).
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
